Ethereum’s Brutal Price Action Contrasts With Strong Spot ETF Demand, Will This Spur A Rebound?

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Following a brief and sudden market-wide uptick, the Ethereum price is drawing closer to the pivotal $2,100 mark again, recording a 12% rise in the past day. Despite the bounce on Wednesday, the broader market of ETH is still quite bearish, but bullish sentiment appears to be gaining momentum in the Spot ETFs sector.

Sharp Decline Meets Quiet Ethereum Spot ETF Inflows

The recent price movement of Ethereum has been quite harsh, with steep declines and ongoing volatility significantly impacting market sentiment. However, beyond the persistent waning price action, a different narrative is unfolding in the Ethereum Spot Exchange-Traded Funds (ETFs).

Despite the sell-off, causing ETH’s price to drop from $4,900 to under $2,000, spot ETF flows show renewed interest and, in certain situations, ongoing capital allocation. This discrepancy between robust ETF demand and poor price performance raises the possibility that institutional and long-term investors are seeing the decline as an opportunity rather than a warning.

After a period of significant outflows in the middle of 2025, Leon Waidmann, market expert and head of research at Lisk, highlighted that ETH has seen selling pressure steadily decrease across its exchange funds. The enormous surges of influx that occurred in late 2024 and early 2025 have vanished, but peak panic selling is also turning out to be an issue.

Compared to the previous turbulent periods, the recent flow bars are much smaller in both directions, and the sellers are running out of steam. According to the expert, this trend is relevant because the institutional exodus appears to be exhausting itself despite one of the sharpest ETH drawdowns in recent memory.

Currently, the weak hands that desired to exit the market have already done so, and this does not mean that the price bottom for ETH is in yet. There is still a slight outflow bias in recent weeks, and a clear accumulation signal has not yet unfolded. 

However, the intensity of selling is clearly fading, representing the first thing that needs to happen before any trend reversal emerges. Thus, Waidmann has warned that when selling stops before sentiment recovers, investors should pay attention. Interestingly, this is where the next move begins to develop.

Short Positions On ETH Are Vanishing From The Market

Given the latest bullish response, the Ethereum market is currently undergoing a crucial shift. Market expert and investor CW reported that ETH short positions are now being destroyed completely, suggesting a growing positive market environment. 

The expert highlighted that there are bearish bets left on the ETH market, with investors gradually leaning toward the long side. Despite this major shift in investors’ sentiment, the rate of increase of high-leverage long positions is very slow. 

Data shared by CW suggests that Investors with high levels of leverage seem to have used up much of their remaining capital. However, the expert has classified this trend as a very positive situation that could be pivotal for the ETH’s price.

Featured image from Adobe Stock, chart from Tradingview.com

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